The 5G conundrum: Hype and reality
Questions surrounding the impact of 5G remain open. Is 5G ‘just another’ generational upgrade for mobile networks, delivering greater speeds and less latency than previous network iterations and thus enabling telcos to become more profitable pipe businesses?
Or is it an opportunity for telcos to completely reinvent themselves and their business models? Or both, says Eric Hatton of Evolving Systems, depending on the choices the CSP makes now?
The years-long migration to the new technology will require an expansion of cellular networks worldwide to include millions of new antennas that will, for one, become the backbone of IoT (Internet of Things) and its billions of sensor-laden devices, from smart dust to smart cars.
In theory (and perhaps yet in practice) the convergence of technologies such as 5G, IoT, blockchain and AI will enable a fully meshed world of wirelessly connected ‘everything’ that would be seamlessly woven into the fabric of our existence, providing our environment with an intelligence that evaluates and responds to us, ultimately transforming how we interact with our day-to-day surroundings. That experience promises to be the truly personal one that has long been desired. If this is so, where might telcos fit into the equation?
Role for telcos
Furthermore, many industries expect 5G to generate billions of dollars through currently unrealised revenue streams, providing an endless supply of applications and services to the four billion+ people that 5G is hoped to reach. One industry prediction suggests that by 2035, the network will enable US$12 trillion (€10 trillion) worth of goods and services while the World Economic Forum describes the era we’re entering as being ‘the Fourth Industrial Revolution’.
If the final form of 5G networks themselves remains unclear (not least with the question of standardisation still evolving), there is still much we do know already about how telcos should be building their businesses with this in mind. How can they leverage increased speed because 5G will be fast, perhaps more than twelve times faster than 4G?
5G will also deliver low latency and high capacity, in a mixture of different radio access technologies. Low latency means immediacy; think no more lag when you hit the play button. High capacity means an escape from the bandwidth problems that have challenged both 3- and 4G networks. Both these factors support the contention that when it comes to customer experience, 5G could be a gamechanger. It will deliver the means to manage the booming numbers of both connected people and devices coming in the near future. It’ll also be the communications-enabling component of the Internet of Things.
Struggling to digitise?
Commercially, however, what to do? Already, there’s evidence that while many mobile operators are talking about digitisation, a far smaller number are actually seeing the impact on their revenue streams and in turn are failing, or struggling, to ‘digitise’ their customer bases. This means a familiar story unfolds; network technology evolves but pricing and customer interaction models don’t.
As a result, one core challenge for telcos now is, having invested in the future, setting up the infrastructure required to reap the commercial benefits is a priority. The continuing decline in voice and messaging revenues that 5G will accelerate means long-standing telco revenue components will have to be not only replaced but surpassed by the share garnered by data revenues.
Critical to achieving this will be managing the evolution of mobile usage which, once understood, can drive pricing that protects present margins while supporting evolutionary business and service models. Reinventing customer relationships through enhanced, brand-led marketing interaction will be a key aspect of successfully doing this.
In the next blog in this series, we’ll look at how the latter might work; what are the key aspects of next-generation customer interaction fit for a 5G world?
The author of this blog is Eric Hatton is the senior vice president of the Customer Activation & Network Services Business Unit for Evolving Systems
About the author
Evolving Systems is a provider of real-time digital engagement solutions and services to more than 100 customers in over 65 countries worldwide. The Company’s portfolio includes market-leading solutions and services for real-time analytics, customer acquisition, customer value management and loyalty for telecom, retail and financial services companies.